What are the amounts of the right-of-use asset

Assignment Help Financial Accounting
Reference no: EM132943159

On January 1, 20x1, Beard Company purchased a machine for $620,000. The machine is expected to have a 10-year life, with no salvage value, and will be depreciated by the straight-line method. On January 1, 20x1, it leased the machine to Child Company for a three-year period at an annual rental of $128,000 to be paid at the end of each year. Beard could have sold the machine for $817,298 instead of leasing it. Child does not know the implicit rate in the lease, but it has an incremental rate of 9%. Child Company has a 4 December 31 reporting year.

Required:

Problem 1. Why is this an operating lease for Child Company?

Problem 2. What are the amounts of the right-of-use asset and lease liability that Child Company should report on its balance sheet at December 31, 2OX1?

Problem 3. How much lease expense should Child Company recognize in 20x1?

Reference no: EM132943159

Questions Cloud

Which any anticipated loss should be recognized : When outcome of a construction contract is estimated reliably, contract revenue and contract costs associated with the construction contract?
When a franchisor acts as an agent for the franchisee : In accounting for a long-term construction contract using the percentage of completion method, the progress billings on contract account is a?
Compute the amount of merchant gain on the transaction : Compute the amount of Merchant's gain on the transaction. Prepare the January 1, 20X1, entries on Merchant's books to account for the sale and leaseback.
What are the minimum data : What are the minimum data that a nurse manager would need about a nursing unit for which he or she is responsible?
What are the amounts of the right-of-use asset : What are the amounts of the right-of-use asset and lease liability that Child Company should report on its balance sheet at December 31, 2OX1?
Critically evaluate contemporary quality : Discuss its application in a project environment and its impact on project life cycle. Students are also required to discuss about two best practice modes
Describe the impact of a tax shield on fixed income yields : Utilizing the information provided in your course textbook(s) or other valid sources, briefly compare the coupon rate and the interest rate regarding bonds.
Prepare the journal entries showing the sale of merchandise : Prepare the journal entries showing (1) the sale of merchandise on credit, including credit terms, (2) the receipt of a partial return of the sale
What does it mean temporary imports : What does it mean temporary imports? Explain the re-importation of exported goods.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Explain what is the retailer effective cost of trade credit

Explain What is the retailer effective cost of trade credit? Assume a 365-day year. Do not round intermediate calculations. Round answer to two decimal places.

  The bank gets its full future value

Suppose you borrow buy a $200000 hours, and put $50,000 down toward the purchase price. You borrow the rest from a bank at 6% annual interest, compounded monthly, on 1.1.16,for a 30-years period. The plan is that you pay on the last day of each month..

  Decrease in net income by replacing the current machine

Granfield Company has a piece of manufacturing equipment with a book value of $41,500 and a remaining useful life of four years. At the end of the four years the equipment will have a zero salvage value. The market value of the equipment is currently..

  Review the financial statement analysis

To enable students in utilising financial ratios for the purpose of evaluating a firm's financial performance and financial position as well as in recognising.

  Compute the before tax npv of the new lift

Compute the before-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the lift will be a profitable investment.

  Current dividend preference means

A current dividend preference means that:

  Calculate the net present value-cost of capital

NPV Calculate the net present value (NPV) for the following 15-year projects. Comment on the acceptability of each. Assume that the firm has a cost of capital of 9%.

  Find what amount should be reported for cash

Prepare a bank reconciliation. If the balance sheet were prepared for Creative Design Co. on August 31, what amount should be reported for cash?

  Identify what would be the effect

If the petty cash fund was not reimbursed at the time the financial statements were prepared. please identify what would be the effect.

  Define par value and discuss the significance in accounting

Companies frequently issue both preferred stock and common stock. What are the major differences in the rights of stockholders between two classes of stock?

  Powers that the federal and state governments

Powers that the federal and state governments both have; example is that both the national government and state governments are allowed to tax

  Purchase qualified replacement property

On November 18, 2014, equipment is stolen from ABC manufacturing. ABC purchased the equipment for $100,000 and its adjusted basis is $0. The insurance company paid ABC $20,000 for its loss on January 6, 2015. How long does ABC have to purchase qualif..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd